Spying Fears Abroad Hurt U.S. Tech Firms

The National Security Agency's surveillance on electronic communications has spurred foreign governments to create new regulations to restrict US–based multinational technology companies’ ability to do business overseas.

Daren Orzechowski, a partner in the Intellectual Property Group at White & Case, said "there is a concern that countries will put up barriers like this," and said they would come at a price. "It's going to weaken the benefit of the technology and impact the ability of people to conduct global e-commerce and to collaborate internationally."

To eliminate counterintelligence risks, countries such as Germany, France and Canada have proposed initiatives that include data-residency requirements which will require foreign technology companies to build local data centers.

Detlev Gabel, a White & Case partner who advises clients on data privacy, said that German companies are stepping up their scrutiny of potential IT providers and are looking more to European vendors.